With the pandemic, an uneven economic recovery, inflation, and the almost impossible task of finding
employees, this has been a trying year for small businesses in Texas. And with the border crisis, it seems
like Texas has been is the focus of too much bad news. But the Texas Congressional delegation –
Democrats and Republicans alike – can do one thing to bring some good news to those struggling in this
region.

Congress is considering raising taxes on working families by raising the Federal Excise Tax for tobacco
products by over $100 billion. Texas Democrats should oppose this measure and help keep costs down
for struggling families and keep jobs for Texas retailers.

This tax will double the federal cigarette tax from $1.01 per pack to $2.02 per pack and increase taxes on
other tobacco products like snuff by over 1,600%.

President Biden and his Administration have repeated many times that they would not increase any
taxes on any American making less than $400,000 per year. But this tax increase would do exactly that.
Adult smokers and dippers are overwhelmingly working class.

In fact, according to the Joint Committee on Taxation, which assessed this proposal, two-thirds of this
tax will be paid by taxpayers making under $75,000. Over a third of the tax will be paid by those making
under $40,000.

Texas adult tobacco consumers already send $1.3 billion dollars in excise taxes, fees, and settlement
expenses each year to the federal government. The government should live within its means, just like
families have to, before raising taxes for more government programs. The economy can’t recover with
more taxes targeted at working families. Any tax imposed at the cash register is money out of their
budgets.

This tax won’t just hit working families. A study by Chmura Economics & Analytics commissioned by the
National Association of Tobacco Outlets finds that this proposal will cost Texas $267.3 million a year in
lost sales, tax revenues and labor income, and result in over 1,100 lost jobs.

Retail merchants like us generate over a third of our in-store sales from tobacco, so this is an existential
threat. Small businesses have been essential during this pandemic and can’t afford to lose sales, and
South Texas simply cannot afford those job losses in 2021.

The sale of tobacco products are already highly regulated and taxed. But we can’t compete with illicit
markets that will flood the state with untaxed tobacco products when consumers are faced with huge
tax hikes. This is exactly what happened when the Federal Excise Tax was raised in 2009. And illicit
markets don’t card minors.

Right now, there are more important issues for the government to focus on – starting with the COVID-19
pandemic and inflation. These issues are stretching family budgets and small businesses beyond the
limit.

The Texas Congressional delegation should do everything possible to remove this massive tax increase
from the budget reconciliation bill. I hope all members, in a bipartisan fashion, will look to closing
loopholes and other methods before taxing working Texans.

Paul Hardin, CAE, President/CEO Texas Food & Fuel Association